How to establish a company in Dubai

Dubai is one of the most prominent global destinations for business and investment, as it enjoys a strategic location linking the Asian, African and European markets. Thanks to its advanced infrastructure, investment-encouraging government policies, and thriving economic environment, Dubai has become an ideal choice for entrepreneurs and investors from all over the world.

Establishing a company in Dubai gives you access to a strong local market, as well as the potential to expand into regional and global markets. However, the process of establishing a company requires a careful understanding of the legal and administrative procedures followed in the emirate. Through this article, we will review the basic steps for establishing a company in Dubai , starting from choosing the appropriate type of company, through registration and licensing procedures, to understanding the taxes and fees that may be imposed on your business.

Whether you are seeking to establish a company in one of the free zones that provide many tax advantages, or you want to establish a local company that serves the Emirati market, this article will provide you with the information and guidance necessary to start your business project with confidence and success.

How to establish a company in Dubai

Choose the type of companies in Dubai

When it comes to establishing a company in Dubai , the first and most important step is to choose the type of company that suits your business goals and the nature of your activity. Dubai offers a variety of options for establishing companies, which can be mainly classified into three categories: free zone companies, local companies, and foreign companies. In this section, we will review each of these types in detail to help you make the best decision.

Free zone companies

Free zone companies are an attractive option for many foreign investors, thanks to the many incentives they offer. The most important of these incentives are:

1. Full foreign ownership: Foreign investors can own 100% of the company without the need for a local partner.
2. Tax exemption: Free zone companies enjoy tax exemptions on corporate profits and personal income for a period that often extends to 50 years.
3. Ease of procedures: The procedures for establishing free zone companies are characterized by simplicity and speed, as all steps can be completed online.
4. Advanced infrastructure: Dubai’s free zones provide advanced infrastructure and modern facilities that contribute to supporting business.

The most famous free zones in Dubai are: Jebel Ali Free Zone (JAFZA), Dubai Internet City (DIC), and Dubai Media City (DMC).

Local companies

Local companies are companies established within non-free zones in Dubai, and usually require a local partner to own 51% of the company’s shares. However, local companies offer some benefits that make them a suitable option for some investors, such as:

1. Access to the local market: Local companies allow you to deal directly with the local market in Dubai and the United Arab Emirates in general.
2. Diversity of commercial activities: Through local companies, you can practice a variety of commercial activities without the restrictions of free zones.
3. Partnership with citizens: Partnering with an Emirati citizen can be an opportunity to strengthen local business relations and benefit from his or her market experience.

Foreign companies

Foreign companies are those companies that wish to establish a branch or representative office in Dubai without having to establish a completely new company. This type of company has several advantages:

1. Maintaining brand identity: Foreign companies can maintain their brand and the identity of the parent company.
2. Taking advantage of the local market: Foreign companies can benefit from the local market in Dubai to expand their business.
3. Flexibility in operations: Establishing a branch or representative office allows greater flexibility in operations and future expansion.

In conclusion, choosing the right type of company depends on a range of factors, including the nature of the business, the target audience, and the allocated budget. It is important to conduct a comprehensive feasibility study and consult legal and business experts to determine the most suitable option to achieve your business goals in Dubai.

How to establish a company in Dubai

Establishing a company in Dubai requires following a set of meticulous procedures to ensure compliance with local laws and regulations. These procedures include several steps that require coordination with various government agencies. We will detail these steps below:

• Obtaining initial approvals

The first step in the process of establishing a company is to obtain initial approvals from the competent authorities. The investor must submit an application that includes preliminary information about the proposed company, such as the type of planned business activity, the legal structure of the company, and founders’ data. It is advisable to seek the assistance of a legal advisor or expert in government procedures to ensure that the application is submitted correctly and to avoid any delays.

• Trade name registration

After obtaining initial approvals, comes the step of registering the trade name. The trade name is what distinguishes your company from other companies, and it must be unique and not used by any other entity in Dubai. The investor must submit several options of trade names to the competent authority, which will examine the proposed names and ensure their compliance with applicable laws and regulations. After the trade name is approved, it is registered and becomes part of the company’s official identity.

• Issuing a commercial license

The final step in the registration process is the issuance of a business license. This step requires submitting a set of official documents such as the company’s articles of incorporation and articles of association, a copy of the founders’ passports, in addition to the required financial documents. After reviewing the documents and verifying their authenticity, the competent authority issues the commercial license that authorizes the company to carry out its activities legally in Dubai.

Issuing a commercial license also includes determining the company’s official location, and this requires submitting a lease or ownership contract for the company’s headquarters. The headquarters must be available and equipped to receive the commercial activity to be established.

The registration and licensing phase requires precision and attention to detail to ensure that the process runs smoothly and without any legal complications. After completing these procedures, the company is ready to launch and conduct its business in Dubai legally.

Taxes and fees for establishing a company in Dubai

Taxes and fees form an essential part of the company establishment process in Dubai , as entrepreneurs must understand the tax system and fees imposed on companies to ensure compliance with local laws and achieve financial efficiency. This part of the article includes an explanation of the types of taxes charged, administrative fees, and tax exemptions available.

Types of taxes imposed

Dubai is an attractive investment destination thanks to its easy tax system. Currently, Dubai does not impose income tax on individuals or companies, which makes it an ideal environment for establishing companies. However, there are some taxes that may apply to certain types of business activities:

1. Value Added Tax (VAT): A 5% VAT has been implemented in the UAE since 2018. This tax is imposed on most goods and services, and registered businesses must collect this tax from customers and pay it to the government.
2. Corporate tax in free zones: In some free zones, companies are exempt from taxes for specific periods ranging from 15 to 50 years, as part of investment incentives.
3. Customs duties: Customs duties are imposed on some imported goods and services, and their percentage varies based on the type of good.

Administrative fees

The process of establishing a company in Dubai requires paying a set of administrative fees that vary depending on the type of company and the region in which it will be established. These fees include the following:

1. Establishment fees: This is a one-time fee paid when establishing the company, and includes the cost of submitting applications and registering the company.
2. License fees: An annual fee is paid to renew the commercial license, and its value varies based on the type of business activity and location.
3. Service Fees: Service fees may include fees for issuing permits, inspections, documentation, and other government services required to operate the company.

Tax exemptions

Dubai provides a range of tax exemptions aimed at attracting foreign investments and promoting economic growth. These exemptions include:

1. Free zone exemptions: As we mentioned previously, companies registered in free zones enjoy tax exemptions of up to 50 years, which enhances the attractiveness of investment in these zones.
2. Exemptions for specific economic activities: The UAE government provides tax exemptions for some strategic economic activities, such as manufacturing, technology, and renewable energy, to encourage investment in these vital sectors.
3. International Tax Agreements: The UAE has signed many tax agreements with different countries to avoid double taxation, making it easier for foreign companies to operate in Dubai without worrying about paying double taxes.

In conclusion, understanding taxes and fees is a vital part of the process of setting up a company in Dubai. Through good planning and compliance with local laws, entrepreneurs can achieve sustainable success in Dubai’s thriving business environment.

Establishing a company in Dubai is an important strategic step for any entrepreneur seeking to benefit from the thriving economic environment and advanced infrastructure that characterize the emirate. By following the steps and procedures outlined in this article, you can successfully establish your company and ensure compliance with all local laws and regulations.

Remember, choosing the right type of company for your industry and needs can have a significant impact on the success of your project. Whether you choose to establish a company in the free zones, a local company, or even a subsidiary of a foreign company, you should be aware of the advantages and disadvantages of each option.

Registration and licensing procedures may seem complicated at first, but they become easier when divided into clear and specific steps. Ensuring obtaining initial approvals, registering the trade name, and issuing the trade license in a timely manner helps you avoid legal and administrative obstacles.

It is also important to be aware of the various taxes and fees that may be imposed on you, and to understand potential exemptions that may be available to your company. Effectively handling these financial aspects can enhance the long-term sustainability and profitability of your company.

In the end, establishing a company in Dubai is not just an administrative process, but rather an investment in a bright future that requires good planning and careful implementation. By applying the information and guidelines mentioned in this article, you will be fully prepared to begin your entrepreneurial journey in one of the most dynamic and developed cities in the world. We wish you good luck and success in your new project.

The most frequently asked questions about establishing a company in Dubai